On March 23, 2026, Governor Bob Ferguson signed Engrossed Substitute House Bill 1155, Chapter 149, Laws of 2026, amending RCW Chapter 49.62. By June 30, 2027, all non-competition covenants in Washington — employment and independent-contractor — will be void and unenforceable, regardless of when they were signed or what income the worker earned. The state's 2019 thresholds and reasonableness tests are gone.
What Becomes Void
- All non-competes. Employment-based and independent-contractor non-competes, including those entered before 2027, become void on June 30, 2027 unless they fall within a narrow exception.
- No income threshold. The prior $100,000/$240,000 (employee/independent contractor) thresholds are eliminated; the ban applies regardless of compensation.
- TRAPs, clawbacks, and forfeitures tied to competition. ESHB 1155 also targets training-repayment agreement provisions (TRAPs), clawbacks, and forfeiture-for-competition clauses that function as de facto non-competes. If the provision penalizes a worker for competing after departure, it is treated as a non-compete.
What Remains Enforceable
Narrowly drafted protections survive:
- Confidentiality and non-disclosure agreements protecting trade secrets and confidential information
- Non-solicitation of customers and employees, if narrowly tailored and not a disguised non-compete
- Sale-of-business non-competes — Washington retains exceptions for sale or purchase of a business interest and, for competition purposes, treats those covenants under existing reasonableness standards
- Limited education-repayment provisions where the employer provided specific, identifiable training and the repayment is prorated and reasonable in amount and duration
A clause labeled "non-solicitation" that bars the worker from accepting business from any former customer will be recharacterized as a non-compete and voided.
The October 1, 2027 Notice Obligation
Employers must notify every current and former worker subject to a now-void non-compete — whether still employed or departed — that the covenant is no longer enforceable, by October 1, 2027. The notice must be individualized and in writing. Failure to notify is itself a violation, exposing the employer to a $5,000 statutory penalty per violation plus actual damages, attorneys' fees, and potential enforcement by the attorney general.
The notice window is short: 92 days from the ban's effective date to identify every affected agreement, draft compliant notice, and mail and document delivery.
Violation Penalties
Aggrieved workers can sue, and courts must award actual damages or $5,000 (whichever is greater), plus attorneys' fees and costs, for each violation — including for merely requiring a worker to sign a void covenant after June 30, 2027. Presenting a new hire with an old template that contains a non-compete after the effective date is a separate violation.
What Employers Should Do by June 30, 2027
- Inventory every covenant. Pull all employment, independent-contractor, and equity agreements signed since 2019 (and earlier) that contain non-compete, TRAP, clawback, or broad non-solicitation language. Flag every Washington worker.
- Rewrite templates now. Remove non-compete clauses from offer letters, handbooks, and equity docs. Replace with narrow confidentiality and customer non-solicitation provisions that define the protected interest specifically.
- Prepare the Oct 1 notice. Draft a plain-language notice stating that the non-competition covenant is void under ESHB 1155 and will not be enforced, and build a mailing and tracking log.
- Train managers. A hiring manager who tells a candidate "we don't enforce that anymore but sign it anyway" creates liability. The covenant must not be presented at all.
- Model retention without non-competes. Post-ban, retention depends on compensation design, garden-leave where lawful, and protection of actual secrets — not on a clause a court will now void.
Simplify Your Financial Management
Non-compete reform changes the value of intangibles you thought you owned. Beancount.io keeps agreement liabilities, deferred compensation, and training-cost postings version-controlled — so the notice you send by Oct 1 ties to the ledger that shows what you actually protected and what you must now write off. Get started for free and make compliance a ledger entry, not a lawsuit.